Massive Wireless Business Model Shift Is Imminent

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February 17 2010 @ 07:26

MOBILE WORLD CONGRESS — It was a meeting of the heavywights as executives of the GSM Association, Vodafone plc, Alcatel-Lucent and BlackBerry-maker Research in Motion Ltd. took the stage in Barcelona on Tuesday with a mix of messages. But in the end, the industry association, operator, gear-maker and device player all agree on one thing: Hold onto your hats. The wireless business model, driven by openness on all levels and applications innovation, is on the brink of a complete transformation from the business models of old.

It will be the “year of the developer,” according to Robert Conway, CEO of GSMA, kicking it off. New business models will be driven by devices like the Apple iPhone, which will bolster the rise of ad-supported services thanks to its focus on enabling cloud-based apps. In fact, he noted, mobile advertising will outstrip Internet advertising by 2013, citing a study from Gartner Inc. that says 8.2 billion smartphones will be around by then, compared with just 1.78 billion PCs. In other words, mobility will be the primary method of connecting to the Internet and each other, he noted, and there will be an attendant revenue shift from the fixed to the wireless Web.

And with that, he took up the them of a new cost profile: With mobility as the primary digital conduit for the global population, higher mobile broadband speeds (28.8mbps is available now) and increased traffic and hardware volumes, delivery costs are falling well below the levels of traditional circuit-switched voice. And that, he noted, has a transformative power, making it feasible to connect smart cities and smart workplaces with new technologies like M2M for greater efficiency.

Add in a rich, innovative application ecosystem, and it changes the game for operators everywhere. He voiced support for a write-once, run-anywhere model that would allow consumers to port their apps from platform to platform – the primary goal of the just-announced Wholesale Applications Community, of which Vodafone and 24 other Tier 1 operators are a part.

Competition should exist on every level, he noted, saying more wholesale initiatives should be on the docket for wireless network owners to enhance choice. Device players and OS providers should work to be open as well, he said, leading to a rising-tide reduction in fragmentation that’s good for everyone.

He also noted that over-the-top services, and in particular video and VoIP apps, will allow operators to gain an important place in the new value chain by leveraging the network to provide quality-of-experience-based billing tiers that prioritize the applications that consumers care about.

Tiered billing can also address the issue of bandwidth hogs. In his keynote, Ben Verwaayen, CEO of ALU, spotlighted the fact that “all you can eat” packages have led to a situation where 5 percent of data users are now using 80 percent of the bandwidth available, leading to an unsustainable situation where traffic is increasing but ARPU is not. Let’s eschew talk of speed and bits, instead shifting to thinking about services, and global views of business models that are less “consumer-centric” and more “society-centric.”

RIM’s CEO, Mike Lazaridis, was no stranger to the themes of the day, making a splash with a new browser, server and the idea of “SuperApps.” The latter are custom apps, preloaded on the BlackBerry, that are completely integrated. BlackBerry users can sync up eBay with their calendar, for instance, or tweet from their e-mail inbox.

RIM is working with Adobe, Oracle, IBM and others to develop them, he noted. The effort is not meant to supplant the company’s third-party developer ecosystem, App World.

Meanwhile, the new super-fast browser brings with it the ability that so many other smartphones now have to surf the Web as one would at home on a PC. Lazaridis said that RIM expects the browser to bring it a wider audience – perhaps the vast consumer audience that BlackBerry’s been trying to target for two years now?

The new BlackBerry Enterprise Server Express, a lighter version of the enterprise server that syncs BlackBerries with Microsoft Exchange, will be free for small businesses that can’t afford and/or don’t need the full-featured version. It syncs with Microsoft Windows Small Business Serve too.

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